TOKYO - The dollar struggled to extend its recent rally on Friday after weaker-than-expected US data tempered expectations for an early interest rate hike, while investors look ahead to next week's Federal Reserve policy meeting.
In early Tokyo trade the euro was at $1.0615, down from $1.0636 in New York. Earlier Thursday the single currency sank below $1.05 to a fresh 12-year low.
The euro was also slightly down at 128.90 yen against 129.00 yen in US trade, while the dollar ticked up to 121.42 yen, from 121.29 yen.
With the European Central Bank just beginning its vast bond-buying monetary easing and the Fed expected to lift rates at some point this year analysts expect the greenback to hit parity with the euro by next year. The last time the pair were equal was in 2002.
But "there was always going to be an ugly, near-term snapback. The (euro's) dip below $1.05 proved a bridge too far", National Australia Bank said in a commentary.
The dollar's latest surge was checked Thursday by figures showing US retail sales fell for the third straight month in February, as severe winter weather gripped large parts of the country.
"The retail sales report was bad across the board, taking the dollar down another notch," Keisuke Hino, a foreign-exchange trader at Mizuho Bank, told Bloomberg News.
"The dollar has come a long way, so it's unsurprising you would have a bit of a correction. The overall trend for dollar strength hasn't changed."
The US unit also turned lower against a range of Asian currencies including the South Korean won, the Thai baht and Indian rupee, although it remains elevated at multi-year highs.
Eyes will now turn on next week's Fed meeting with investors hoping to get more clues about its timetable for a rate hike. Investors are also nervously watching strained talks between Greece and its European creditors over reforming its bailout.